Can investing in meme coins create generational wealth?

The current debate among crypto investors is that there are always meme coin investments that include: dogwifat, (WIF 3.17%) dogecoin, (Doge 3.25%) and Shiba Inu (SHIB 2.18%) Because of their very high returns, they are more likely to create “generational wealth” than traditional investments such as stocks. In their terminology, intergenerational wealth is about what one would expect: a sum of enough wealth for an investor to retire on that income and pass on an equally comfortable situation to his or her descendants.

Is the meme coin booster on something? Is it really possible to make a lot of money buying the riskiest and most speculative financial instruments in existence? Answering the question is a little more complicated than a simple yes or no, so we'll discuss the relevant Let's take a closer look at the problem.

Chasing generational wealth with meme coins is a risky proposition

First of all, let's address one thing. Mathematically speaking, it is certainly possible for small investments in cryptocurrencies to yield absurdly high returns, and such returns far exceed all but the most successful stock investments. For example, if he bought $1,000 of Dogecoin five years ago, he would now own nearly $63,000, so how much cash would he get if he made a larger investment? I can imagine it.

However, the likelihood of such an outcome actually occurring is close to zero for most investors for several reasons.

First, there was very little mention of Dogecoin in the public domain in April 2019, making it highly unlikely that investors would choose to purchase Dogecoin. This is especially true given that the coin did not have any catalysts on the horizon as there was no team promoting or promoting the coin.

Second, most investors don't have the conviction or patience to hold on to risky coins until they increase significantly in value. This means that the probability of holding a coin with a similar trajectory like Dogecoin or Shiba Inu is minimal. As the coin's value soars into the stratosphere, low-cost investors are likely to feel pressure to sell, as there is nothing but hype to drive further price increases.

Finally, it is not likely that investors will actually choose Dogecoin or another coin that later grows rapidly. There are thousands of meme coins. Most go to zero, many slump forever, a bunch grow moderately, and only a select few reach market capitalizations in the tens of billions.

So don't get caught up in the euphoria of crypto investors touting meme coins as a path to generational wealth. Even if you have the foresight to invest in a future winner when prices are low and hype is minimal, the challenge of weathering the ups and downs it will experience is more than most people can bear. It will be.

There is a reasonable way to achieve your financial goals with cryptocurrency investing

Despite the above facts, there are still ways to responsibly invest in cryptocurrencies, including meme coins, for the purpose of wealth building. You'll need to do plenty of research and be prepared to hold for the long term, so temper your expectations and be prepared to put in a fair amount of work.

The most obvious plays right now are coins like: Bitcoin or SolanaThis benefits from macro tailwinds from the recent halving of Bitcoin's mining reward block size, as well as a lot of attention from the general public and most serious crypto investors. Bitcoin and Solana are still a little more volatile than stocks, and the risks are significantly higher, but if you can commit to holding them for at least the next five years, the odds are in your favor.

Especially if you want to experience the growth of other people's meme coin investments, Solana is for you. Most of the memecoin activity this year and last has been on the Solana chain, and its low fees and fast transactions are likely to keep it that way, at least for a while.

Additionally, assuming your portfolio is already well-diversified, it's okay to dabble in memecoin investing as long as you follow these five rules:

1. Don't invest more capital than you can light without worrying about anything
2. Do not allocate more than 5% of your portfolio's value to memecoin investments as a segment.
3. We only invest in established meme coins that consistently have a market cap above $300 million even after significant drawdowns.
4. Invest only in meme coins with large and active communities on social media
5. Invest only in meme coins that contain memes that are appealing to a large audience.Nothing offensive, niche, or confusing

In addition to the above, if you manage to identify meme coins that the market has recently dumped but still have a large number of active coin holders, your chances of success will increase.

However, be aware that these are not suitable for most people, as you still need to have an ironclad risk tolerance and diamond hands to squeeze the most money out of these investments.